Does International Trade Lead to Conflict?

“The war in Ukraine has revealed an amazing paradox: nations can be at war while still trading with each other. Between the beginning of the war on February 24 and June 1, 2022, the European Union paid Russia 60 billion euros for fossil fuel deliveries only, while the Russian Federation was waging a savage war against a EU de facto ally, Ukraine.”

Dr. Sorin Adam Matei, the FORCES director, and Naghisa Ishinabe, a former junior research fellow, published their conclusions of a year-long study in the National Interest, revealing some unexpected connections between military conflict and international trade.

“The paradox of trading while fighting is not the product of hypocrisy or a cruel joke of the gods. It reveals an unexpected facet of economic globalization: the more it integrates nations, the more it creates the premises for conflict…. The “trade dependency-breeds-conflict” paradox was fueled not only by mere bilateral trade, but most importantly by the emergence of two trade blocks that decoupled the Western and democratic powers (United States, European Union, and the allied East Asian nations) from each other. For the first time, the United States and EU find themselves separated from each other and shackled to their main competitors. Research conducted by the FORCES initiative and the Krach Institute for Tech Diplomacy at Purdue University discovered vast co-dependency relationships across political blocks by analyzing the network of international trade data. We analyzed data collected in 2014 by the Global Trade Analysis Center at Purdue University. ”